2017 (7) TMI 411 - AT - Service Tax

CENVAT credit - Input credit distribution - denial of CENVAT credit of ₹ 11,02,153/- is only on the ground that the invoices issued by service providers did not contain valid service tax registration number and the document did not contain name of the appellant which is ISD - Held that - findings of adjudicating authority is not is not in consonance of the decision in the case of Diya Systems (management) Pvt. Ltd 2017 (2) TMI 1075 - CESTAT BANGALORE wherein Tribunal has very clearly held that these are rectifiable errors and the non mentioning of service tax registration does not mean that service tax liability has not been discharged by service provider - Once it is accepted that service tax liability has been discharged by service providers, the rectifiable error of non mentioning of service tax registration needs to be condoned - appeal allowed - decided in favor of appellant.

Summary

Issues: Incorrect availing of Cenvat credit, Denial of credit based on service provider invoices, Irregular distribution of credit, Non-compliance with statutory provisions.

Analysis:
1. Incorrect availing of Cenvat credit: The main issue in this case is whether the appellant incorrectly availed Cenvat credit amounting to specific sums on various services before distribution to its manufacturing unit. The adjudicating authority denied a portion of the credit due to discrepancies in the invoices provided by the service providers. However, the appellant argued that these errors were rectifiable and should not result in the denial of credit.

2. Denial of credit based on service provider invoices: The denial of Cenvat credit amounting to ?11,02,153/- was primarily based on the fact that the invoices from service providers did not contain valid service tax registration numbers and were not addressed to the appellant, who is the Input Service Distributor (ISD). The appellant contended that these errors were rectifiable and should not lead to the denial of credit, citing precedents where similar errors were condoned by the Tribunals.

3. Irregular distribution of credit: Another aspect of the case involved the denial of credit amounting to ?1,02,830/- from invoices issued by HDFC Bank. The department argued that these invoices were not in the name of the ISD but in the name of MCL Chennai, making the distribution of credit irregular. The appellant argued that the credit was related to the factory and should be allowed. The appellant referenced a Board Circular to support their argument, highlighting exemptions for certain service providers regarding invoice requirements.

4. Non-compliance with statutory provisions: The adjudicating authority's decision to deny credit was based on the lack of valid service tax registration numbers on the invoices and the absence of the appellant's name on the documents. However, the appellant argued that these errors should not result in the denial of credit, especially considering that the service tax liability had been discharged by the service providers. The appellant relied on Tribunal decisions and a Board Circular to support their position.

In conclusion, the Appellate Tribunal set aside the impugned order and allowed the appeal, emphasizing that the errors in the invoices were rectifiable and should not lead to the denial of Cenvat credit. The Tribunal's decision was influenced by precedents and statutory provisions that supported the appellant's arguments regarding the eligibility of the credit despite the discrepancies in the invoices.